KFC needs no introduction. We all are fond of its chicken. But now let us view KFC with an economic perspective. Many of the economic concepts can be applied in sales strategy of KFC. Some of them are:-
1- LAW OF DEMAND~
When KFC introduced the chicken wings, its price was high because of which there was the drop down in its demand. So in order to increase its demand, they began to offer 12 pieces of chicken wings at Rs 399 on every Wednesday. This led to the increase in the quantity of chicken wings and the demand increased as well.
2- MONOPOLISTIC COMPETITION~
KFC has managed to create a monopolistic competition in the market. KFC offers differentiated and wide varieties of food. It possesses an unique feature in its food and hence creates monopolistic competition.
3- ECONOMIES OF SCALE~
KFC produce more outputs because of which the production cost gets reduced which is an outcome of efficient production. When food are produced at a larger scale, the economies of scale followed as fixed cost is spread over a large size of product. Thus, KFC uses the economies of scale in order to keep the competitors away.
4- MARGINAL RATE OF SUBSTITUTION~
KFC offers varieties of food. So sometimes, if one variety of food goes out of stock, then consumers are ready to substitute one for another. This is possible since KFC offers large varieties of food and all are equally tasty because of which the customers are ready to substitute.
5- LAW OF DIMINISHING RETURNS~
When the factor of production is fixed, the increase of labor in the production process can be used as an under utilized resource. Hence, the marginal product increases. When the labor increase and over production occur, the marginal product starts decreasing. Therefore, KFC doesn't overload its product as it has set quality standard in the market.
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